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Doing B Nigeria PDF
Doing B Nigeria PDF
Nigeria
Nigeria
2016 The International Bank for Reconstruction and Development / The World Bank
1818 H Street NW, Washington, DC 20433
Telephone: 202-473-1000; Internet: www.worldbank.org
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AttributionPlease cite the work as follows: World Bank. 2016. Doing Business 2016: Measuring
Regulatory Quality and Efficiency. Washington, DC: World Bank Group. DOI: 10.1596/978-1-4648-0667-4.
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ISBN (paper): 978-1-4648-0667-4
ISBN (electronic): 978-1-4648-0668-1
DOI: 10.1596/978-1-4648-0667-4
ISSN: 1729-2638
Cover design: Corporate Visions, Inc.
Nigeria
CONTENTS
Introduction .................................................................................................................................. 4
Starting a business ..................................................................................................................... 17
Dealing with construction permits ........................................................................................... 30
Getting electricity ....................................................................................................................... 47
Registering property .................................................................................................................. 59
Getting credit .............................................................................................................................. 77
Protecting minority investors ................................................................................................... 84
Paying taxes ................................................................................................................................ 91
Trading across borders .............................................................................................................. 97
Enforcing contracts .................................................................................................................. 104
Resolving insolvency ................................................................................................................ 112
Labor market regulation ......................................................................................................... 119
Distance to frontier and ease of doing business ranking .................................................... 125
Resources on the Doing Business website ............................................................................ 128
Nigeria
INTRODUCTION
Doing Business sheds light on how easy or difficult it is
for a local entrepreneur to open and run a small to
medium-size business when complying with relevant
regulations. It measures and tracks changes in
regulations affecting 11 areas in the life cycle of a
business: starting a business, dealing with construction
permits, getting electricity, registering property, getting
credit, protecting minority investors, paying taxes,
trading across borders, enforcing contracts, resolving
insolvency and labor market regulation. Doing Business
2016 does not present rankings of economies on labor
market regulation indicators or include the topic in the
aggregate distance to frontier score or ranking on the
ease of doing business.
In a series of annual reports Doing Business presents
quantitative indicators on business regulations and the
protection of property rights that can be compared
across 189 economies, from Afghanistan to Zimbabwe,
over time. The data set covers 47 economies in SubSaharan Africa, 32 in Latin America and the Caribbean, 25
in East Asia and the Pacific, 25 in Eastern Europe and
Central Asia, 20 in the Middle East and North Africa and
8 in South Asia, as well as 32 OECD high-income
economies. The indicators are used to analyze economic
outcomes and identify what reforms have worked, where
and why.
This economy profile presents the Doing Business
indicators for Nigeria. To allow useful comparison, it also
provides data for other selected economies (comparator
Nigeria
Nigeria
ECONOMY OVERVIEW
Nigeria
Nigeria
Figure 1.2 How Nigeria and comparator economies rank on the ease of doing business
Note: The rankings are benchmarked to June 2015 and based on the average of each economys distance to frontier (DTF) scores
for the 10 topics included in this years aggregate ranking. The distance to frontier score benchmarks economies with respect to
regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economys
distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier.
For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities.
Source: Doing Business database.
Nigeria
10
Nigeria
Figure 1.5 How far has Nigeria come in the areas measured by Doing Business?
Note: The distance to frontier score shows how far on average an economy is from the best performance achieved by any economy on
each Doing Business indicator. Starting a business is comparable to 2010. Getting credit, protecting minority investors, paying taxes and
resolving insolvency had methodology changes in 2014 and thus are only comparable to 2013. Dealing with construction permits,
registering property, trading across borders, enforcing contracts and getting electricity had methodology changes in 2015 and thus are
only comparable to 2014. The measure is normalized to range between 0 and 100, with 100 representing the best performance (the
frontier). See the data notes starting on page 119 of the Doing Business 2016 report for more details on the distance to frontier score.
Source: Doing Business database.
11
Nigeria
Nigeria DB2015
Lagos DB2016
Kano DB2016
India DB2016
Kenya DB2016
Nigeria DB2016
139
131
--
--
155
151
120
17
77.13
76.85
78.9
71.2
73.59
74.47
81.18
94.57
Procedures (number)
8.7
8.7
8.0
11.0
12.9
11.0
6.0
4.0
Time (days)
30.8
30.8
28.0
40.0
29.0
26.0
46.0
4.5
31.7
33.9
31.2
33.3
13.5
35.3
0.3
0.1
Slovenia (0.00)
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Dealing with
Construction Permits
(rank)
175
175
--
--
183
149
90
23
Singapore (1)
Dealing with
Construction Permits
(DTF Score)
49.61
49.57
42.35
73.92
32.47
59.37
69
78.92
Singapore (92.97)
Procedures (number)
16.1
16.1
17.0
13.0
33.6
15.0
19.0
9.0
5 Economies (7.00)*
Indicator
Starting a Business
(rank)
Starting a Business (DTF
Score)
12
Lagos DB2016
Kano DB2016
India DB2016
Kenya DB2016
Time (days)
106.3
106.3
116.0
74.0
191.5
146.0
141.0
105.0
Singapore (26.00)
Cost (% of warehouse
value)
24.4
26.6
31.0
2.4
26.0
6.9
1.0
1.1
Qatar (0.00)
6.8
6.8
6.5
8.0
11.0
7.0
10.5
9.0
Getting Electricity
(rank)
182
181
--
--
70
127
168
15
30.91
30.78
30.61
31.91
74.56
58.57
41.99
89.12
9.0
9.0
9.0
9.0
5.0
4.0
5.0
4.0
14 Economies (3.00)*
26.7
23.1
Indicator
Nigeria DB2015
Nigeria
Nigeria DB2016
Time (days)
181.2
181.2
184.0
172.0
90.1
110.0
226.0
79.0
437.7
478.0
437.7
437.7
442.3
732.3
670.5
26.7
Japan (0.00)
0.0
0.0
0.0
0.0
5.5
0.0
0.0
8.0
18 Economies (8.00)*
Registering Property
(rank)
181
185
--
--
138
115
101
45
Registering Property
(DTF Score)
31.43
25.18
29.86
36.7
50.29
56.63
60.79
74.5
Procedures (number)
12.1
12.1
13.0
9.0
7.0
9.0
7.0
6.0
4 Economies (1.00)*
Time (days)
69.6
69.6
77.0
45.0
47.0
61.0
23.0
21.5
3 Economies (1.00)*
Cost (% of property
value)
10.5
18.6
10.1
11.8
7.5
4.2
6.4
4.6
13
7.0
15.0
14.0
24.0
3 Economies (28.50)*
59
52
--
--
42
28
59
19
60
60
60
60
65
70
60
75
6.0
6.0
6.0
6.0
6.0
7.0
5.0
7.0
3 Economies (12.00)*
Depth of credit
information index (0-8)
6.0
6.0
6.0
6.0
7.0
7.0
7.0
8.0
26 Economies (8.00)*
0.1
0.1
0.1
0.1
0.0
0.0
0.0
0.0
Portugal (100.00)
6.7
5.8
6.7
6.7
22.0
14.3
62.0
100.0
22 Economies
(100.00)*
Protecting Minority
Investors (rank)
20
33
--
--
115
14
Singapore (1)*
Protecting Minority
Investors (DTF Score)
68.33
63.33
68.33
68.33
73.33
46.67
71.67
78.33
Singapore (83.33)*
Strength of minority
investor protection
index (0-10)
6.8
6.3
6.8
6.8
7.3
4.7
7.2
7.8
3 Economies (8.30)*
Extent of conflict of
interest regulation
index (0-10)
7.0
6.0
7.0
7.0
6.7
4.7
8.0
8.3
Singapore (9.30)*
Extent of shareholder
governance index (010)
6.7
6.7
6.7
6.7
8.0
4.7
6.3
7.3
4 Economies (8.00)*
181
181
--
--
157
101
20
15
4.0
India DB2016
7.0
Kano DB2016
6.3
Lagos DB2016
6.3
Nigeria DB2015
Indicator
Nigeria DB2016
Nigeria
Kenya DB2016
14
Lagos DB2016
Kano DB2016
India DB2016
Kenya DB2016
32.17
32.63
32.17
32.18
56.14
71.96
88.75
91.34
59.0
59.0
59.0
59.0
33.0
30.0
7.0
8.0
907.9
907.9
956.0
747.0
243.0
201.5
200.0
110.0
Luxembourg (55.00)
33.3
32.4
33.4
33.3
60.6
37.1
28.8
32.0
Ireland (25.90)
182
182
--
--
133
131
130
38
Denmark (1)*
18.05
18.05
18.05
18.05
56.45
57.83
58.01
91.4
Denmark (100)*
159
159
159
159
109
21
100
24
15 Economies (0.00)*
786
786
786
786
413
143
428
280
18 Economies (0.00)*
Time to export:
Documentary
compliance (hours)
131
131
131
131
41
19
68
Jordan (0.00)
Cost to export:
Documentary
compliance (USD)
250
250
250
250
102
191
170
25
20 Economies (0.00)*
298
298
298
298
287
180
144
19 Economies (0.00)*
1,077
1,077
1,077
1,077
574
908
657
205
28 Economies (0.00)*
Time to import:
Documentary
compliance (hours)
173
173
173
173
63
84
36
21 Economies (1.00)*
Cost to import:
Documentary
564
564
564
564
145
550
213
30 Economies (0.00)*
Indicator
Nigeria DB2015
Nigeria
Nigeria DB2016
15
Lagos DB2016
Kano DB2016
India DB2016
Kenya DB2016
Nigeria DB2015
Nigeria
Nigeria DB2016
Enforcing Contracts
(rank)
143
143
--
--
178
102
119
33
Singapore (1)
Enforcing Contracts
(DTF Score)
48.59
48.59
49.34
46.07
32.41
56.25
53.18
69.36
Singapore (84.91)
Time (days)
509.8
509.8
447.0
720.0
1,420.0
465.0
600.0
437.0
Singapore (150.00)
Cost (% of claim)
57.7
57.7
62.0
43.4
39.6
47.2
33.2
43.9
Iceland (9.00)
Quality of judicial
processes index (0-18)
7.7
7.7
8.0
6.5
7.5
9.0
6.5
15.0
3 Economies (15.50)*
Indicator
compliance (USD)
Procedures (number,
old methodology)
40
Resolving Insolvency
(rank)
143
143
--
--
136
144
41
13
Finland (1)
Resolving Insolvency
(DTF Score)
30.68
30.64
30.68
30.68
32.59
30.64
64.29
82.04
Finland (93.81)
28.0
27.9
28.0
28.0
25.7
27.9
35.3
88.6
Japan (92.90)
Time (years)
2.0
2.0
2.0
2.0
4.3
4.5
2.0
1.0
Ireland (0.40)
Cost (% of estate)
22.0
22.0
22.0
22.0
9.0
22.0
18.0
6.0
Norway (1.00)
Outcome (0 as
piecemeal sale and 1 as
going concern)
Strength of insolvency
framework index (0-16)
5.0
5.0
5.0
5.0
6.0
5.0
14.5
11.0
4 Economies (15.00)*
Nigeria
16
receives a no practice mark. Similarly, an economy receives a no practice mark if regulation exists but is never used in practice or if a
competing regulation prohibits such practice. Either way, a no practice mark puts the economy at the bottom of the ranking on the
relevant indicator. * Two or more economies share the top ranking on this indicator. A number shown in place of an economys name
indicates the number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business
website (http://www.doingbusiness.org).
17
Nigeria
STARTING A BUSINESS
Formal registration of companies has many
immediate benefits for the companies and for
business owners and employees. Legal entities can
outlive their founders. Resources are pooled as
several shareholders join forces to start a company.
Formally registered companies have access to
services and institutions from courts to banks as well
as to new markets. And their employees can benefit
from protections provided by the law. An additional
benefit comes with limited liability companies. These
limit the financial liability of company owners to their
investments, so personal assets of the owners are not
put at risk. Where governments make registration
easy, more entrepreneurs start businesses in the
formal sector, creating more good jobs and
generating more revenue for the government.
For 11 economies the data are also collected for the second largest business city.
18
Nigeria
STARTING A BUSINESS
Where does the economy stand today?
What does it take to start a business in Nigeria?
According to data collected by Doing Business, starting a
business there requires 8.70 procedures, takes 30.80
days, costs 31.70% of income per capita and requires
paid-in minimum capital of 0.00% of income per capita
(figure 2.1). Most indicator sets refer to a case scenario in
Nigeria
19
20
Nigeria
STARTING A BUSINESS
Globally, Nigeria stands at 139 in the ranking of 189
economies on the ease of starting a business (figure 2.2).
The rankings for comparator economies and the regional
Figure 2.2 How Nigeria and comparator economies rank on the ease of starting a business
21
Nigeria
STARTING A BUSINESS
What are the details?
Underlying the indicators shown in this chapter for
Nigeria is a set of specific proceduresthe
bureaucratic and legal steps that an entrepreneur
must complete to incorporate and register a new
firm. These are identified by Doing Business through
collaboration with relevant local professionals and
the study of laws, regulations and publicly available
information on business entry in that economy.
Following is a detailed summary of those procedures,
along with the associated time and cost. These
procedures are those that apply to a company
matching
the
standard
assumptions
(the
standardized company) used by Doing Business in
collecting the data (see the section in this chapter on
what the indicators measure).
STANDARDIZED COMPANY
Legal form: Private Limited Liability Company
Paid-in minimum capital requirement: NGN 0
City: Lagos, Kano
Start-up Capital: 10 times GNI per capita
Table 2.2 Summary of time, cost and procedures for starting a business in Nigeria - Lagos
No.
Procedure
Time to
complete
Cost to complete
5 days on average
NGN 500
application form
7 days
No.
22
Nigeria
Procedure
Time to
complete
Cost to complete
1 day
11 days on
average
see procedure
details.
1 day
(simultaneous
with
Section 74 of the Companies and Allied Matters Act (CAMA) requires
previous
every company to have a common seal. The company is thus mandated
procedure)
to have a company seal by the Companies and Allied Matters Act 1990
(2004) (CAMA) first schedule paragraph 15, which provides a standard
NGN 4,000
No.
23
Nigeria
Procedure
Time to
complete
Cost to complete
4 days
no charge
Register for income tax and VAT at the Federal Inland Revenue
Service
* Register for personal income tax PAYE at the State Tax Office
2 days
All employers shall register with the relevant state tax authority for
(simultaneous with
income tax withholding.
previous
The PAYE Regulations, 2003 made pursuant to the Personal Income Tax
procedure)
Act provides that all employers are to register with the Lagos State
Board of Internal Revenue Tax Office nearest to the registered company
no charge
No.
24
Nigeria
Procedure
Time to
complete
Cost to complete
address for the purpose of remitting income tax deducted from their
employees. The employer must within 6 months of commencing a
business deduct tax from emoluments of employees and remit the
amount deducted to any of the designated collecting banks.
The registration requirements are as follows:
1. A copy of certificate of incorporation.
2. List of staff and their annual salaries.
3. The Directors Tax Clearance Certificates (now Electronic Tax
Clearance Certificate)
4. Letter of application for registration.
Upon completion of registration, an Employer's Identification Number
will be issued.
An employer who fails or refuses to register commits an offence and is
liable on conviction to pay a NGN 25,000 fine in addition to the
payment of arrears of the tax due.
Agency: State Tax Office
Summary of time, cost and procedures for starting a business in Nigeria - Kano
No.
Procedure
Time to
complete
Cost to complete
No.
25
Nigeria
Procedure
Time to
complete
Cost to complete
4 days
NGN 500
7 days
Stamp duty at
0.75% of share
capital + NGN
1,000 for stamping
of two extra copies
of memorandum
and articles of
association (NGN
500 each) + NGN
500 for
incorporation forms
1 day
NGN 50
1 day
see details
Obtain bank draft from a bank for payment of the registration fees
No.
26
Nigeria
Procedure
Time to
complete
Cost to complete
18 days
1 day
Section 74 of the Companies and Allied Matters Act (CAMA) requires
(simultaneous
with
every company to have a common seal. The company is thus mandated
previous
to have a company seal by the Companies and Allied Matters Act 1990
procedure)
(2004) first schedule paragraph 15, which provides a standard
memorandum of articles of companies and requires directors to provide
a company seal. It is also the common practice, especially because
NGN 5,000
No.
27
Nigeria
Procedure
Time to
complete
Cost to complete
5 days
no charge
Register for income tax and VAT at the Federal Inland Revenue
Service
Entrepreneurs can register for both corporate income tax and VAT at
the new Integrated Tax Office. For corporate income tax, the Federal
Inland Revenue Service (FIRS) will require the applicant to complete tax
registration forms. The new company registers at a Federal Tax Office
nearest to its place of business or registered office. A letter is written to
the tax authority applying for a tax clearance certificate. A form
obtained from the tax office is filled and the following documents
submitted with it:
No.
28
Nigeria
Procedure
Time to
complete
Cost to complete
* Register for personal income tax PAYE at the State Tax Office
no charge
no charge
10
Fees for the business premises permit are paid into a government
account at a designated bank. The fees depend on the type of activity,
category of business (limited liability company, partnership or sole
proprietorship), size of the business, and its location, and range from
NGN 600 to NGN 100,000. For a medium manufacturing company
located in Kano metropolis the business premises permit costs NGN
20,000. The annual renewal fee is the same as initial registration.
Agency: Designated bank
1 day
NGN 20,000
No.
29
Nigeria
Procedure
Time to
complete
Cost to complete
3 days
no charge
11
30
Nigeria
31
Nigeria
The warehouse:
32
Nigeria
Figure 3.1 What it takes to comply with formalities to build a warehouse in Nigeria - Lagos
Nigeria
33
34
Nigeria
Figure 3.2 How Nigeria and comparator economies rank on the ease of dealing with construction permits
35
Nigeria
BUILDING A WAREHOUSE
Estimated value of
warehouse :
NGN 24,402,256
City :
Lagos, Kano
Table 3.2 Summary of time, cost and procedures for dealing with construction permits in Nigeria - Lagos
No.
Procedure
Time to
complete
Cost to complete
14 days
NGN 100,000
1 day
NGN 250
7 days
NGN 150,000
36
Nigeria
Procedure
Time to
complete
Cost to complete
3 days
NGN 7,500
42 days
NGN 7,100,616
But if the land has not been surveyed, then a private surveyor
would have to conduct the survey of the plot of land and this
survey would have to be registered with the Surveyors General
Office. In that case, the survey would be verified against the
master plan of Lagos. The black copy will be for BuildCo, the red
copy will be registered with the Land Registry and a third copy
will be kept at the Surveyor General Office. The cost of survey by
a private surveyor can range from NGN 50,000 to NGN 100,000.
37
Nigeria
Procedure
Time to
complete
Cost to complete
1 day
NGN 122,011
7 days
NGN 35,000
Proof of ownership
38
Nigeria
Procedure
Time to
complete
Cost to complete
7 days
no charge
7 days
no charge
7 days
no charge
1 day
no charge
1 day
no charge
1 day
no charge
10
Agency: Lagos State Material Testing Laboratory
12
39
Nigeria
Procedure
Time to
complete
Cost to complete
14 days
no charge
1 day
no charge
1 day
NGN 50,000
13 days
no charge
15
17
Once payment has been made, the Zonal Office (ZO) procures
the connection materials and carries out the connection works.
Agency: Zonal Office
Summary of time, cost and procedures for dealing with construction permits in Nigeria - Kano
No.
Procedure
Time to
complete
Cost to complete
40
Nigeria
Procedure
Time to
complete
Cost to complete
1 day
no charge
1 day
NGN 117,045
2 days
no charge
Apply for a building plan approval at the Kano Urban Planning and
Development Authority
In order to obtain a building plan approval, BuildCo must submit a duly
completed application form to the Kano Urban Planning and
Development Authority, along with the following documents:
41
Nigeria
Procedure
Time to
complete
Cost to complete
21 days
no charge
1 day
NGN 195,218
7 days
no charge
1 day
no charge
After the inspection and the payments have been completed, the
documents submitted for approval along with the inspection report
and the 3 remaining copies of the plan are given to the Kano Urban
Planning and Development Authority (KUPD) for final approval. The
documents and plans are scrutinized and countersigned by a
government architect, structural engineer and electrical engineer,
before being submitted to the director. The director attaches a letter to
the file before sending it to the managing director, who endorses the
application, while the director signs the drawings and issue the
approval letter. If granted, KUPD issues BuildCo a building plan
approval authorizing the construction of the warehouse to proceed, as
well as a plaque showing the file number and expiration date of the
approval (3 years). A statutory limit reduced the time taken to complete
this procedure to 14 days (10 working days).
Agency: Kano Urban Planning and Development Authority
The engineer will file a report notifying the Kano Urban Planning and
Development Authority (KNUPD) of the completion of workand
certifying that the warehouse was built according to the approved
plans. The inspectors will then proceed with a final inspection to verify
that the work has been completed according to the approved building
plans.
42
Nigeria
Procedure
Time to
complete
Cost to complete
1 day
no charge
7 days
no charge
1 day
no charge
1 day
NGN 15,000
1 day
no charge
10
The Board of Internal Revenue service will visit the new warehouse and
register it for tax purposes.
Agency: Internal Revenue Authority
Apply for water connection at the Kano State Water Board and pay
application form fee
11
12
After the application has been submitted, a team of inspectors from the
water board office visits the site to ascertain what needs to be done.
Agency: Kano State Water Board
43
Nigeria
Procedure
Time to
complete
Cost to complete
30 days
NGN 250,000
13
44
Nigeria
Table 3.3 Summary of time quality control and safety mechanisms in Nigeria
Answer
(Lagos)
Score
(Lagos)
6.50
8.00
0.50
0.00
Free of
charge.
0.5
List of
required
documents.
0.0
Licensed
architect;
Licensed
engineer.
No
requirements
provided.
0.0
1.00
1.0
Licensed
architect.
2.00
Inspections
by external
engineer or
firm;
Inspections
at various
phases.
1.0
Mandatory
inspections
Do legally mandated inspections occur in practice during
are always
construction? (0-1)
done in
practice.
1.0
3.00
0.0
1.00
Not easily
accessible.
Yes,
external
2.0
1.0
2.00
Inspections by
external
engineer or
firm.
1.0
Mandatory
inspections
are always
done in
practice.
1.0
2.00
Yes, final
inspection is
2.0
45
Nigeria
Answer
(Lagos)
Score
(Lagos)
engineer
submits
report for
final
inspection.
Final
inspection
always
occurs in
practice.
done by
government
agency.
1.0
0.0
Which parties (if any) are held liable by law for structural
flaws or problems in the building once it is in use? (0-1)
0.0
No party is
required by
law to
obtain
insurance .
0.0
Being a
registered
architect or
engineer.
0.0
0.0
0.00
No party is
held liable
under the law.
0.0
No party is
required by
law to obtain
insurance .
0.0
0.00
Being a
registered
architect or
engineer.
Final
inspection
does not
occur in
practice.
0.00
No party is
held liable
under the
law.
3.00
Minimum
number of
years of
experience;
University
degree in
architecture
or
engineering;
Being a
registered
architect or
engineer.
2.0
University
degree in
engineering,
construction
or
construction
management;
Being a
registered
architect or
engineer.
1.0
Nigeria
46
47
Nigeria
GETTING ELECTRICITY
Access to reliable and affordable electricity is vital for
businesses. To counter weak electricity supply, many
firms in developing economies have to rely on selfsupply, often at a prohibitively high cost. Whether
electricity is reliably available or not, the first step for
a customer is always to gain access by obtaining a
connection.
What do the indicators cover?
Doing Business records all procedures required for a
local business to obtain a permanent electricity
connection and supply for a standardized warehouse,
as well as the time and cost to complete them. These
procedures include applications and contracts with
electricity utilities, clearances from other agencies
and the external and final connection works. In
addition, this year Doing Business adds two new
measures: the reliability of supply and transparency
of tariffs index (included in the aggregate distance to
frontier score and ranking on the ease of doing
business) and the price of electricity (omitted from
these aggregate measures). The ranking of
economies on the ease of getting electricity is
determined by sorting their distance to frontier
scores for getting electricity. These scores are the
simple average of the distance to frontier scores for
each of the component indicators. To make the data
comparable across economies, several assumptions
are used.
The warehouse:
48
Nigeria
Is a permanent one.
49
Nigeria
GETTING ELECTRICITY
Where does the economy stand today?
What does it take to obtain a new electricity connection
in Nigeria? According to data collected by Doing
Business, getting electricity there requires 9.00
procedures, takes 181.20 days and costs 437.70% of
income per capita (figure 4.1).
Nigeria
50
51
Nigeria
GETTING ELECTRICITY
Globally, Nigeria stands at 182 in the ranking of 189
economies on the ease of getting electricity (figure 4.2).
The rankings for comparator economies and the regional
Figure 4.2 How Nigeria and comparator economies rank on the ease of getting electricity
52
Nigeria
GETTING ELECTRICITY
What are the details?
The indicators reported here for Nigeria are based on a
set of specific proceduresthe steps that an
entrepreneur must complete to get a warehouse
connected to electricity by the local distribution utility
identified by Doing Business. Data are collected from the
distribution utility, then completed and verified by
electricity regulatory agencies and independent
professionals such as electrical engineers, electrical
contractors and construction companies. The electricity
distribution utility surveyed is the one serving the area
(or areas) in which warehouses are located. If there is a
choice of distribution utilities, the one serving the largest
number of customers is selected.
The procedures are those that apply to a warehouse and
electricity connection matching the standard
assumptions used by Doing Business in collecting the
data (see the section in this chapter on what the
indicators cover). The procedures, along with the
associated time and cost, are summarized below.
Kano Electricity
Distribution Company
Price of electricity
(US cents per kWh) Kano:
23
Price of electricity
(US cents per kWh) Lagos:
27
City:
Lagos, Kano
Table 4.2 Summary of time, cost and procedures for getting electricity in Nigeria
No.
Procedure
Time to
complete
Cost to complete
NGN 0
No.
53
Nigeria
Procedure
Time to
complete
Cost to complete
31 calendar days
NGN 0
18 calendar days
NGN 1,559,250
14 calendar days
NGN 0
The Inspecting Engineer from NEPA will check all materials to ascertain
whether they were of correct quality. The electrical contractor will show
the letter of approval. The NEPA engineer will check if the installation has
14 calendar days
been properly done, and if it is in compliance, a Certificate of
compliance will be issued.
Agency: Nigerian Electrical Power Authority
NGN 0
No.
54
Nigeria
Time to
complete
Cost to complete
1 calendar day
NGN 2,000
Procedure
Submit payment to Federal Ministry of Power and pick up
inspection certificate
The customer can go to the utility to pick up the estimate letter. The
estimate letter is usually prepared on the spot when the contractor
requests it. The contractor then makes the payment mentioned in the
30 calendar days
letter, and also submits the inspection certificate from the Ministry to the
utility.
NGN 575,000
The utility engineer conducts the internal wiring inspection within a week
30 calendar days
after the estimate is paid.
NGN 0
Once the internal wiring inspection is complete, the utility sends over the
connection team to do the meter installation and then turns on
30 calendar days
electricity flow.
NGN 0
Summary of time, cost and procedures for getting electricity in Nigeria - Kano
No.
Procedure
Time to
complete
Cost to complete
44 calendar days
NGN 0
No.
55
Nigeria
Procedure
Time to
complete
Cost to complete
21 calendar days
NGN 0
18 calendar days
NGN 1,559,250
10 calendar days
NGN 0
14 calendar days
NGN 0
then bills the customer. The electrician must pick up application form at
Kano Electricity Distribution Company, completes and submits it
back.This form must provide the PIN (Personal Identification Number) of
the licensed electrician and a letter stating that he will be in charge of
the internal installation as well as the installation of the transformer.
Agency: Kano Electricity Distribution Company
The Inspecting Engineer from an outside agency will check all materials
to ascertain whether they were of correct quality. The electrical
contractor will show the letter of approval. The engineer will check if the
installation has been properly done, and if it is in compliance, a
Certificate of compliance will be issued.
Agency: Electrical Power Authority
No.
56
Nigeria
Procedure
Time to
complete
Cost to complete
1 calendar day
NGN 2,000
The customer can go to the utility to pick up the estimate letter. The
estimate letter is usually prepared on the spot when the contractor
requests it. The contractor then makes the payment mentioned in the
25 calendar days
letter, and also submits the inspection certificate from the Ministry to the
utility.
NGN 575,000
The utility engineer conducts the internal wiring inspection within a week
30 calendar days
after the estimate is paid.
NGN 0
Once the internal wiring inspection is complete, the utility sends over the
connection team to do the meter installation and then turns on
33 calendar days
electricity flow.
Agency: Kano Electricity Distribution Company
NGN 0
57
Nigeria
GETTING ELECTRICITY
Reliability of supply and transparency of tariffs index
The reliability of supply and transparency of tariffs
index encompasses quantitative data on the duration
and frequency of power outages as well as
qualitative information on the mechanisms put in
place by the utility for monitoring power outages
and restoring power supply, the reporting
relationship between the utility and the regulator for
power outages, the transparency and accessibility of
tariffs and whether the utility faces a financial
deterrent aimed at limiting outages (such as a
requirement to compensate customers or pay fines
when outages exceed a certain cap).
The index ranges from 0 to 8, with higher values
indicating greater reliability of electricity supply and
greater transparency of tariffs.
Score (Lagos)
Answer
(Kano)
Score
(Kano)
0.00
0.00
0.00
0.00
3240.0
1764.0
540.0
168.0
0.0
No
No
0.0
No
0.0
0.0
No
1.00
Yes
1.00
Yes
58
Nigeria
Answer
(Lagos)
Answer
(Kano)
0.00
No
Score (Lagos)
Score
(Kano)
0.00
No
1.00
0.00
Yes
No
http://ekedp.
com/tariffcode-details/
n.a
Yes
Yes
26.70
23.10
59
Nigeria
REGISTERING PROPERTY
Ensuring formal property rights is fundamental.
Effective administration of land is part of that. If
formal property transfer is too costly or
complicated, formal titles might go informal again.
And where property is informal or poorly
administered, it has little chance of being accepted
as collateral for loanslimiting access to finance.
What do the indicators cover?
Doing Business records the full sequence of
procedures necessary for a business to purchase
property from another business and transfer the
property title to the buyers name. The transaction is
considered complete when it is opposable to third
parties and when the buyer can use the property,
use it as collateral for a bank loan or resell it. In
addition, this year Doing Business adds a new
measure to the set of registering property
indicators, an index of the quality of the land
administration system in each economy. The
ranking of economies on the ease of registering
property is determined by sorting their distance to
frontier scores for registering property. These scores
are the simple average of the distance to frontier
scores for each of the component indicators. To
make the data comparable across economies,
several assumptions about the parties to the
transaction, the property and the procedures are
used.
The parties (buyer and seller):
Is registered in the land registry or cadastre, or both, and is free of title disputes.
For the 11 economies with a population of more than 100 million, data for a second city have been added.
60
Nigeria
REGISTERING PROPERTY
Where does the economy stand today?
What does it take to complete a property transfer in
Nigeria? According to data collected by Doing Business,
registering property there requires 12.10 procedures,
takes 69.60 days and costs 10.50% of the property value
(figure 5.1).
Nigeria
61
62
Nigeria
REGISTERING PROPERTY
Globally, Nigeria stands at 181 in the ranking of 189
economies on the ease of registering property (figure
5.2). The rankings for comparator economies and the
Figure 5.2 How Nigeria and comparator economies rank on the ease of registering property
63
Nigeria
REGISTERING PROPERTY
Economies worldwide have been making it easier for
entrepreneurs to register and transfer propertysuch as
by computerizing land registries, introducing time limits
for procedures and setting low fixed fees. Many have cut
Table 5.1 How has Nigeria made registering property easieror not?
By Doing Business report year from DB2011 to DB2016
DB year
DB2016
Reform
Nigeria made transferring property in Lagos less costly by
reducing fees for property transactions.
64
Nigeria
REGISTERING PROPERTY
What are the details?
The indicators reported here are based on a set of
specific proceduresthe steps that a buyer and seller
must complete to transfer the property to the buyers
nameidentified by Doing Business through
information collected from local property lawyers,
notaries and property registries. These procedures
are those that apply to a transaction matching the
standard assumptions used by Doing Business in
collecting the data (see the section in this chapter on
what the indicators cover). The procedures, along
with the associated time and cost, are summarized
below.
Property value:
NGN 24,402,256
City:
Lagos, Kano
Table 5.2 Summary of time, cost and procedures for registering property in Nigeria Lagos
No.
Procedure
Time to
complete
Cost to complete
1 day
NGN 250
1 day
Before someone can carry out a search at the Land Registry an Affidavit
must be first sworn and filed at the High Court. If the affidavit is
registered before 12, then the lawyer will be able to proceed with the
search. Otherwise it will be on the next day.
Agency: High Court of Justice, Ministry of Justice, Notary public
No.
65
Nigeria
Procedure
Time to
complete
Cost to complete
1 day
no cost
3-5 days
Agency: Lands Bureau (Form 1c) and Lawyer's office (Deed of Assignment)
Parties obtain a copy of the survey Plan, as approved by the Office of the
Surveyor General, which is required for the Governor's Consent. Under
Nigerian law, a clear proof of the identity of the land plot is needed. The
survey plan gives the coordinates of the plot and must fit in the official
map of Lagos. It identifies the boundary of the property. If using a
private surveyor, he must be a registered one.
Payment advice to be obtained from the Revenue Office for the purpose
of PID Number generation after which is affected in the Bank. Payment
for the above can be made to any Government accreditated bank either
1 day
Charting Fees
(NGN 7,500) +
Endorsement Fees
(NGN 1,500) +
NGN 1,500 for
No.
66
Nigeria
Procedure
by a bank draft, cheque or cash. The Bank then issues a Government
Revenue receipt. The receipts is what is submitted together with the
application for Governor's Consent.
Time to
complete
Cost to complete
Form 1C
No.
67
Nigeria
Procedure
Time to
complete
Cost to complete
no cost
After investigation and assessment of the true value of the property, the
applicant will be issued with an assessment letter. The Letter will contain
3 days
the amount for the Registration fee, Consent fee, Neighborhood
(simultaneous
improvement charge and the Capital gains tax that should be paid to the
with procedures
Lagos State Government Account.
no cost
6, 7, 9, 10 and 11)
After investigation and assessment of the true value of the property, the
applicant will be issued with an assessment letter. The Letter will contain
the amount for Stamp duty verified with Federal Internal Revenue
Service. Payment of the Stamp duty should be paid to the Lagos State
Government Account.
Agency: Federal Internal Revenue service (FIRS)
10
The applicant pays the remaining fees at the designated bank by means
of certified cheques:
Consent Fee 1.5% + Registration fee 0.5% + Stamp duty 0.5% + capital
gains tax of 0.5% is also paid. Receipts are provided to the applicant,
who will make copies of those receipts before submitting the original
receipts to the Land Registry for verification.
On January 5, 2015, the Government of the Lagos State of the Federal
Republic of Nigeria adopted the Executive Bill No EO/BRF/001 of 2015.
1 day
(simultaneous
with procedures
6, 7, 8, 10 and
11)
no cost
No.
68
Nigeria
Procedure
Time to
complete
Cost to complete
The Order, which takes immediate effect, reduces Consent Fees from 6
percent to 1.5 percent while Capital Gains tax, which was previously 2
percent, is reduced to 0.5 percent. Also cost of Stamp Duty has been
reduced from 2 percent to 0.5 percent while Registration Fees has been
reduced from 3 percent to 0.5 percent.
However, the Executive Order provides, among others, that "unless
otherwise indicated, the valuation of landed property for the
determination of tax and other charges payable shall be by reference to
the Statement of Fair market Value produced by relevant professionals,
adopted by the State Government and published from time to time in
the Official Government Gazette".
11
no cost
12
1 day
Already paid in
Procedure 10
No.
69
Nigeria
Procedure
Time to
complete
Cost to complete
7 days
Already paid in
Procedure 10
Time to
complete
Cost to complete
7 days
1 day
3.75% of property
value legal fee
13
The lawyer will then follow up on the deed to be filed to the Lands
Registry. The receipt and paying-in slips evidencing payment are given
to the cashier at the Lands Registry. With proof of payment, a lands
officer is assigned to enter the Deed into the Registry records.
Agency: Land Registry
Summary of time, cost and procedures for registering property in Nigeria Kano
No.
Procedure
Conduct search of property title and obtain consent application
form at Lands Registry
The lawyer representing the parties fills out and submits a letter, which
states the purpose of the search. The search fee is paid in cash at the
Lands Registry.
Agency: Ministry of Lands and Physical Planning
Seller and buyer sign four (4) copies of the deed of assignment and the
application for consent form. Legal fees are charged based on the Scale
of Fees for Conveyancing Matters [Legal Practitioners (Remuneration for
Legal Documentation and Other Land Matters) Order 1991]. This is a
sliding scale based on slices of the consideration involved, and averages
out at about 7.5% of the consideration. In practice, due to competition
amongst lawyers, the fees charged for property assignment in Kano are
lower than those prescribed and amount to approximately 3.75% of
property value. The fees will include all the steps required until the new
title is registered under the buyer's name
Agency: Lawyer's Office
30 days
By virtue of the Land Use Act, promulgated in 1978, all land comprised in (simultaneous
territory of each state in the federation became vested in the Governor with procedure 4)
of that state, whose prior consent is mandatory for the legal validity of
any transfers or alienation of interest in landed property. In Kano, the
processing fee of
NGN 10,000
No.
70
Nigeria
Procedure
Time to
complete
Cost to complete
7 days
(simultaneous
with procedure 3)
no cost
1 day
no cost
1 day
no cost
1 day
5% of property
value registration
fee + 3% of
property value
stamp duty fee
The buyer or his/her agent pays the prescribed fees and stamp duty at
the designated bank. Payment of stamp duty is by bank draft payable to
any of the designated receiving banks. Stamp duty for property
assignment between companies is assessed at 3% of the property value.
No.
71
Nigeria
Procedure
Time to
complete
Cost to complete
1 day
no cost
3 days
no cost
72
Nigeria
REGISTERING PROPERTY
Quality of land administration
The quality of land administration index is the sum of
the scores on the reliability of infrastructure,
transparency of information, geographic coverage
and land dispute resolution indices.
The index ranges from 0 to 30, with higher values
indicating better quality of the land administration
system.
Score (Lagos)
Answer
(Kano)
Score
(Kano)
7.00
4.00
2.00
0.00
Ministry of
Lands and
Physical
Planning.
Lagos State
Land Registry
1.0
Paper
0.0
1.0
No
0.0
Yes
Kano
Geographic
Information
System,
KanoGIS
under the
Ministry of
Lands &
Physical
Planning
(Office of
the
Cadastre).
Office of the
Surveyor
General
Paper
0.0
Paper
0.0
73
Nigeria
Answer
(Lagos)
Score (Lagos)
Answer
(Kano)
Score
(Kano)
No
0.0
No
0.0
Separate
databases
0.0
Separate
databases
0.0
No
0.0
No
0.0
2.00
Yes, online
1.00
1.0
Anyone
who pays
the official
fee
1.0
0.5
Yes, in
person
0.0
0.5
Yes, in
person
0.0
http://www.la
goslands.com
/directorates/
directorateof-landservices/docu
mentsrequired-forgovernersconsent/
Yes, online
http://www.la
goslands.com
/directorates/
land-registrydirectorate/sc
ale-ofcharges/
74
Nigeria
Answer
(Lagos)
Score (Lagos)
Answer
(Kano)
Score
(Kano)
0.0
No
0.0
No
0.0
No
0.0
No
0.0
No
0.0
Only
intermediarie
Who is able to consult maps of land plots in the largest
s and
business city?
interested
parties
0.0
Only
intermediar
ies and
interested
parties
0.0
No
0.0
Yes, in
person
0.0
No
0.0
No
0.0
No
0.0
No
0.0
0.00
0.00
No
0.0
No
0.0
No
0.0
No
0.0
75
Nigeria
Answer
(Lagos)
Score (Lagos)
Answer
(Kano)
Score
(Kano)
No
0.0
No
0.0
No
0.0
No
0.0
registry?
3.00
3.00
Yes
1.5
Yes
1.5
Yes
0.5
Yes
0.5
No
0.0
No
0.0
Yes
0.5
Yes
0.5
Lawyer;
Interested
parties.
Yes
Registrar.
No
State High
Court
More than 3
Registrar;
Lawyer;
Interested
parties.
0.5
Yes
0.5
Registrar;
Lawyer;
Interested
parties.
0.0
No
0.0
High Court
of Kano
State.
0.0
More than
0.0
76
Nigeria
Answer
(Lagos)
Score (Lagos)
years
No
Answer
(Kano)
Score
(Kano)
3 years
0.0
No
0.0
77
Nigeria
GETTING CREDIT
Two types of frameworks can facilitate access to
credit and improve its allocation: credit information
systems and borrowers and lenders in collateral and
bankruptcy laws. Credit information systems enable
lenders rights to view a potential borrowers financial
history (positive or negative)valuable information to
consider when assessing risk. And they permit
borrowers to establish a good credit history that will
allow easier access to credit. Sound collateral laws
enable businesses to use their assets, especially
movable property, as security to generate capital
while strong creditors rights have been associated
with higher ratios of private sector credit to GDP.
What do the indicators cover?
Doing Business assesses the sharing of credit
information and the legal rights of borrowers and
lenders with respect to secured transactions through
2 sets of indicators. The depth of credit information
index measures rules and practices affecting the
coverage, scope and accessibility of credit
information available through a credit registry or a
credit bureau. The strength of legal rights index
measures whether certain features that facilitate
lending exist within the applicable collateral and
bankruptcy laws. Doing Business uses two case
scenarios, Case A and Case B, to determine the scope
of the secured transactions system, involving a
secured borrower and a secured lender and
examining legal restrictions on the use of movable
collateral (for more details on each case, see the Data
Notes section of the Doing Business 2016 report).
These scenarios assume that the borrower:
Has up to 50 employees.
78
Nigeria
GETTING CREDIT
Where does the economy stand today?
How well do the credit information system and collateral
and bankruptcy laws in Nigeria facilitate access to credit?
The economy has a score of 6.00 on the depth of credit
information index and a score of 6.00 on the strength of
legal rights index (see the summary of scoring at the end
of this chapter for details). Higher scores indicate more
credit information and stronger legal rights for
borrowers and lenders.
Figure 6.1 How Nigeria and comparator economies rank on the ease of getting credit
79
Nigeria
GETTING CREDIT
One way to put an economys score on the getting credit
indicators into context is to see where the economy
stands in the distribution of scores across economies.
Figure 6.2 highlights the score on the strength of legal
80
Nigeria
GETTING CREDIT
When economies strengthen the legal rights of lenders
and borrowers under collateral and bankruptcy laws, and
increase the scope, coverage and accessibility of credit
Table 6.1 How has Nigeria made getting credit easieror not?
By Doing Business report year from DB2011 to DB2016
DB year
Reform
DB2013
81
Nigeria
GETTING CREDIT
What are the details?
The getting credit indicators reported here for Nigeria
are based on detailed information collected in that
economy. The data on credit information sharing are
collected through a survey of a credit registry and/or
credit bureau (if one exists). To construct the depth of
credit information index, a score of 1 is assigned for each
of 8 features of the credit registry or credit bureau (see
summary of scoring below).
Lagos
Kano
No
No
Does the law allow businesses to grant a non possessory security right in a
single category of movable assets, without requiring a specific description
of collateral?
Yes
Yes
Does the law allow businesses to grant a non possessory security right in
substantially all of its assets, without requiring a specific description of
collateral?
Yes
Yes
Yes
Yes
Yes
Yes
Is a collateral registry in operation for both incorporated and nonincorporated entities, that is unified geographically and by asset type, with
an electronic database indexed by debtor's name?
No
No
No
No
No
No
Are secured creditors paid first (i.e. before tax claims and employee
claims) when a debtor defaults outside an insolvency procedure?
Yes
Yes
82
Nigeria
Lagos
Kano
Are secured creditors paid first (i.e. before tax claims and employee
claims) when a business is liquidated?
No
No
No
No
Does the law allow parties to agree on out of court enforcement at the
time a security interest is created? Does the law allow the secured creditor
to sell the collateral through public auction and private tender, as well as,
for the secured creditor to keep the asset in satisfaction of the debt?
Yes
Yes
Credit bureau
Credit registry
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
No
No
Yes
No
Are bureau or registry credit scores offered as a valueadded service to help banks and financial institutions
assess the creditworthiness of borrowers?
No
No
Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not
operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0.
83
Nigeria
Coverage
Credit bureau
Credit registry
715,363
N/A
Number of individuals
5,644,126
N/A
Total
6,359,489
73,189
6.70
0.10
Number of firms
84
Nigeria
Nigeria
85
Figure 7.1 How Nigeria and comparator economies perform on the strength of minority investor protection index
86
Nigeria
Figure 7.2 Summary of the various minority investor protection indices for Nigeria and comparator economies.
87
Nigeria
Table 7.1 How has Nigeria strengthened minority investor protectionsor not?
By Doing Business report year from DB2011 to DB2016
DB year
DB2016
Reform
Nigeria strengthened minority investor protections by
requiring that related-party transactions be subject to external
review and to approval by disinterested shareholders. This
reform applies to both Kano and Lagos.
88
Nigeria
Table 7.2 Summary of scoring for the protecting minority investors indicators in Nigeria
89
Nigeria
plaintiff? (0-1)
Can a court void the transaction upon a successful claim by a
shareholder plaintiff? (0-2)
Ease of shareholder suits index (0-10)
Before filing suit, can shareholders owning 10% of the
companys share capital inspect the transaction documents?
(0-1)
Can the plaintiff obtain any documents from the defendant
and witnesses during trial? (0-3)
Voidable if
negligently
concluded
1.0
Voidable if
negligently
concluded
7.00
Yes
Documents that
the defendant
relied on
1.0
7.00
1.0
Yes
1.0
1.0
Documents
that the
defendant
relied on
1.0
0.0
No
0.0
2.0
Yes
2.0
1.0
Yes
1.0
2.0
Yes regardless
of outcome
2.0
6.70
7.00
6.70
7.00
0.0
No
0.0
1.0
Yes
1.0
1.0
Yes
1.0
0.0
No
0.0
1.0
Yes
1.0
1.0
Yes
1.0
0.0
No
0.0
1.0
Yes
1.0
1.0
Yes
1.0
1.0
Yes
1.0
6.00
6.00
0.0
No
0.0
0.0
No
0.0
1.0
Yes
1.0
90
Nigeria
Yes
1.0
Yes
1.0
Yes
1.0
Yes
1.0
Yes
1.0
Yes
1.0
Yes
1.0
Yes
1.0
Yes
1.0
Yes
1.0
No
0.0
No
0.0
No
0.0
No
0.0
7.00
7.00
Yes
1.0
Yes
1.0
Yes
1.0
Yes
1.0
No
0.0
No
0.0
No
0.0
No
0.0
Yes
1.0
Yes
1.0
Yes
1.0
Yes
1.0
Yes
1.0
Yes
1.0
No
0.0
No
0.0
Yes
1.0
Yes
1.0
Yes
1.0
Yes
1.0
91
Nigeria
PAYING TAXES
Taxes are essential. The level of tax rates needs to be
carefully chosenand needless complexity in tax
rules avoided. Firms in economies that rank better
on the ease of paying taxes in the Doing Business
study tend to perceive both tax rates and tax
administration as less of an obstacle to business
according to the World Bank Enterprise Survey
research.
What do the indicators cover?
Using a case scenario, Doing Business records the
taxes and mandatory contributions that a mediumsize company must pay in a given year as well as
measures of the administrative burden of paying
taxes and contributions. This case scenario uses a set
of financial statements and assumptions about
transactions made over the year. Information is also
compiled on the frequency of filing and payments as
well as time taken to comply with tax laws. The
ranking of economies on the ease of paying taxes is
determined by sorting their distance to frontier
scores on the ease of paying taxes. These scores are
the simple average of the distance to frontier scores
for each of the component indicators, with a
threshold and a nonlinear transformation applied to
3
one of the component indicators, the total tax rate .
All financial statement variables are proportional to
2012 income per capita. To make the data
comparable across economies, several assumptions
are used.
The nonlinear distance to frontier for the total tax rate is equal to the distance to frontier for the total tax rate to the power of 0.8.
The threshold is defined as the total tax rate at the 15th percentile of the overall distribution for all years included in the analysis up
to and including Doing Business 2015, which is 26.1%. All economies with a total tax rate below this threshold receive the same
score as the economy at the threshold.
3
92
Nigeria
PAYING TAXES
Where does the economy stand today?
What is the administrative burden of complying with
taxes in Nigeriaand how much do firms pay in taxes?
On average, firms make 59.00 tax payments a year,
spend 907.90 hours a year filing, preparing and paying
taxes and pay total taxes amounting to 33.30% of profit
(see the summary at the end of this chapter for details).
Most indicator sets refer to a case scenario in the largest
business city of an economy, except for 11 economies for
which the data are a population-weighted average of the
Figure 8.1 How Nigeria and comparator economies rank on the ease of paying taxes
93
Nigeria
PAYING TAXES
Economies around the world have made paying taxes
faster, easier and less costly for businessessuch as by
consolidating payments and filings of taxes, offering
electronic systems for filing and payment, establishing
taxpayer service centers or allowing for more deductions
Table 8.1 How has Nigeria made paying taxes easieror not?
By Doing Business report year from DB2011 to DB2016
DB year
Reform
DB2013
94
Nigeria
PAYING TAXES
What are the details?
The indicators reported here for Nigeria are based on
the taxes and contributions that would be paid by a
standardized case study company used by Doing
Business in collecting the data (see the section in this
chapter on what the indicators cover). Tax
practitioners are asked to review a set of financial
statements as well as a standardized list of
assumptions and transactions that the company
completed during its 2nd year of operation.
Respondents are asked how much taxes and
mandatory contributions the business must pay and
how these taxes are filed and paid.
Payments
(number)
Notes on
payments
Time
(hours)
398
30%
taxable
profit
17.88
12
396
10%
gross
salaries
9.87
2%
taxable
profit
2.43
Training Tax
1%
gross
salaries
1.13
Employee Compensation
Contribution paid by the
employer
12
1%
gross
salaries
1.13
10%
capital
gains
0.47
10%
interest
income
0.26
0.132%
property
value
0.2
jointly
withheld
not
included
95
Nigeria
Payments
(number)
Notes on
payments
Time
(hours)
5/1000 of
value of
check
0.18
0.04
0.02
Road license
fixed fee
NGN 5,000 depending
per vehicle on type of
vehicle
Infrastructure Development
Tax
NGN 100
per
employee
fixed fee
withheld
12
5%
value
added
not
included
Fuel tax
included in
fuel price
12
2.5%
Advertising tax
various
rates
Totals
162
jointly
59.00
Payments
(number)
8%
gross
salaries
956.00
Notes on
payments
Time
(hours)
withheld
withheld
small
amount
small
amount
33.40
310
30%
taxable
profit
17.89
12
320
10%
gross
salaries
9.87
2%
taxable
profit
2.43
Training Tax
1%
gross
salaries
1.13
Employee Compensation
Contribution paid by the
employer
12
1%
gross
salaries
1.13
jointly
96
Nigeria
Payments
(number)
Notes on
payments
Time
(hours)
capital
gains
0.47
10%
interest
income
0.26
0.125%
property
value
0.19
5%
5/1000 of
value of
check
0.18
0.04
0.02
withheld
not
included
Road license
fixed fee
NGN 5,000 depending
per vehicle on type of
vehicle
Infrastructure Development
Tax
NGN 100
per
employee
fixed fee
withheld
12
5%
value
added
not
included
Fuel tax
included in
fuel price
12
2.5%
Advertising tax
various
rates
Totals
Source: Doing Business database.
59.00
117
jointly
8%
747.00
gross
salaries
withheld
withheld
small
amount
small
amount
33.30
97
Nigeria
Time
Cost
Insurance cost and informal payments for which no
receipt is issued are excluded from the costs
recorded. Costs are reported in U.S. dollars.
Contributors are asked to convert local currency into
U.S. dollars based on the exchange rate prevailing on
the day they answer the questionnaire.
98
Nigeria
99
Nigeria
Figure 9.1 How Nigeria and comparator economies rank on the ease of trading across borders
100
Nigeria
Table 9.2 Summary of export and import time and cost for trading across borders in Nigeria
Lagos
Kano
Sub-Saharan Africa
159
159
108
786
786
542
131
131
97
250
250
246
298
298
160
1077
1077
643
173
173
123
564
564
351
101
Nigeria
Table 9.3 Summary of trading details, transport time and documents for trading across borders in Nigeria
Lagos
Export
Product
Trade partner
Kano
Import
Export
Import
United Kingdom
Japan
United Kingdom
Japan
100
100
436
436
1486
1486
Apapa port
Apapa port
Apapa port
Apapa port
Distance (km)
11
11
1002
1002
2.1
2.1
10.0
10.0
39.6
39.6
1.5
1.5
Documents to export
Bill of lading
Cargo Release order
Clean Certificate of Inspection (CCI)
Commercial invoice
EUR 1 - Certificate of origin
Nigerian Export Proceeds Form (NXP Form)
Packing list
Request for information (RFI)
Single Goods Declaration (SGD) Form C 2010
Terminal handling receipt
Documents to import
Bill of lading
Cargo Release Order
Combined Certificate of Value and Origin (CCVO)
Commercial invoice
e-Form "M" (valid for foreign exchange)
Nigeria
102
Exit Gate
Letter of Credit
Manufacturer's certificate of production or
SONCAP
Packing list
Payment receipt of customs fees and duties
Pre-Arrival Assessment Report (PAAR)
Product Certificate 1 (Unregistered Status)
Single Goods Declaration (SGD)
Terminal handling receipts
Source: Doing Business database.
Note: Doing Business continues to collect data on the number of documents needed to trade internationally. Unlike in previous
years, however, these data are excluded from the calculation of the distance to frontier score and ranking. The time and cost
for documentary compliance serve as better measures of the overall cost and complexity of compliance with documentary
requirements than does the number of documents required.
Export (Kano)
103
Nigeria
Import (Lagos)
Import (Kano)
104
Nigeria
ENFORCING CONTRACTS
Effective commercial dispute resolution has many
benefits. Courts are essential for entrepreneurs
because they interpret the rules of the market and
protect economic rights. Efficient and transparent
courts encourage new business relationships because
businesses know they can rely on the courts if a new
customer fails to pay. Speedy trials are essential for
small enterprises, which may lack the resources to
stay in business while awaiting the outcome of a long
court dispute.
What do the indicators cover?
Doing Business measures the time and cost for
resolving a standardized commercial dispute through
a local first-instance court. In addition, this year it
introduces a new measure, the quality of judicial
processes index, evaluating whether each economy
has adopted a series of good practices that promote
quality and efficiency in the court system. This new
index replaces the indicator on procedures, which
was eliminated this year. The ranking of economies
on the ease of enforcing contracts is determined by
sorting their distance to frontier scores. These scores
are the simple average of the distance to frontier
scores for each of the component indicators.
The dispute in the case study involves the breach of a
sales contract between 2 domestic businesses. The
case study assumes that the court hears an expert on
the quality of the goods in dispute. This distinguishes
the case from simple debt enforcement. To make the
data comparable across economies, Doing Business
uses several assumptions about the case:
The dispute concerns a lawful transaction
between two businesses (Seller and Buyer),
both located in the economys largest
business city. For 11 economies the data
are also collected for the second largest
business city.
105
Nigeria
ENFORCING CONTRACTS
Where does the economy stand today?
How efficient is the process of resolving a commercial
dispute through the courts in Nigeria? According to data
collected by Doing Business, contract enforcement takes
509.80 days and costs 57.70% of the value of the claim.
Most indicator sets refer to the largest business city of an
economy, except for 11 economies for which the data
are a population-weighted average of the 2 largest
business cities. See the chapter on distance to frontier
Figure 10.1 How Nigeria and comparator economies rank on the ease of enforcing contracts
106
Nigeria
ENFORCING CONTRACTS
What are the details?
The data on time and cost reported here for Nigeria
are built by following the step-by-step evolution of a
commercial sale dispute within the court, under the
assumptions about the case described above (figure
10.2). The time and cost of resolving the
standardized dispute are identified through study of
the codes of civil procedure and other court
regulations, as well as through questionnaires
completed by local litigation lawyers (and, in a
quarter of the economies covered by Doing Business,
by judges as well).
ECONOMY DETAILS
Claim value - Kano:
NGN 893,803
NGN 893,803
City:
Lagos, Kano
Figure 10.2 Time and cost of contract enforcement in Nigeria and comparator economies
107
Nigeria
Table 10.2 Details on time and cost for enforcing contracts in Nigeria
Indicator
Lagos
Kano
Sub-Saharan
Africa average
Time (days)
447.00
720.00
653
40.0
21.0
265.0
661.0
Enforcement of judgment
142.0
38.0
Cost (% of claim)
62.00
43.40
Attorney fees
45.0
25.0
Court fees
12.0
11.3
Enforcement fees
5.0
7.1
44.9
108
Nigeria
ENFORCING CONTRACTS
Quality of judicial processes index
The quality of judicial processes index measures
whether each economy has adopted a series of good
practices in its court system in four areas: court
structure and proceedings, case management, court
automation and alternative dispute resolution. The
score on the quality of judicial processes index is the
sum of the scores on these 4 sub-components. The
index ranges from 0 to 18, with higher values
indicating better, more efficient judicial processes.
Figure 10.3 Quality of judicial processes index in Nigeria and comparator economies
109
Nigeria
Score (Lagos)
Answer
(Kano)
Score
(Kano)
8.00
6.50
3.0
3.0
4.5
4.5
Yes
1.5
No
1.5
0.0
1.5
Yes
Yes
Yes
Yes
Yes
1.0
Yes
1.0
Yes
0.5
Yes
0.5
1.0
1.0
1. Time standards
1.0
1.0
Yes
Yes
Yes
Yes
Yes
Yes
2. Adjournments
0.0
0.0
No
No
No
No
n.a.
n.a.
No
0.0
No
0.0
No
0.0
No
0.0
110
Nigeria
Answer
(Lagos)
Score (Lagos)
Answer
(Kano)
Score
(Kano)
No
0.0
No
0.0
No
0.0
No
0.0
0.0
0.0
No
0.0
No
0.0
No
0.0
No
0.0
No
0.0
No
0.0
4. Publication of judgments
0.0
0.0
No
No
No
No
2.5
2.5
1. Arbitration
1.5
1.5
Yes
Yes
No
No
Yes
Yes
2. Mediation/Conciliation
1.0
1.0
Yes
Yes
Yes
Yes
111
Nigeria
Answer
(Lagos)
Score (Lagos)
Answer
(Kano)
No
No
Score
(Kano)
112
Nigeria
RESOLVING INSOLVENCY
A robust bankruptcy system functions as a filter,
ensuring the survival of economically efficient
companies and reallocating the resources of
inefficient ones. Fast and cheap insolvency
proceedings result in the speedy return of businesses
to normal operation and increase returns to
creditors. By clarifying the expectations of creditors
and debtors about the outcome of insolvency
proceedings, well-functioning insolvency systems can
facilitate access to finance, save more viable
businesses and sustainably grow the economy.
Court fees
113
Nigeria
RESOLVING INSOLVENCY
Where does the economy stand today?
According to data collected by Doing Business, resolving
insolvency takes 2.00 years on average and costs 22.00%
of the debtors estate. The average recovery rate is 28.00
cents on the dollar. Most indicator sets refer to a case
scenario in the largest business city of an economy,
except for 11 economies for which the data are a
population-weighted average of the 2 largest business
cities.
Globally, Nigeria stands at 143 in the ranking of 189
economies on the ease of resolving insolvency (figure
Figure 11.1 How Nigeria and comparator economies rank on the ease of resolving insolvency
Nigeria
114
Figure 11.2 Efficiency of proceedings - time, cost and recovery rate in Nigeria and comparator economies.
115
Nigeria
Table 11.1 Summary of data for the strength of insolvency framework index Nigeria
Answer
Explanation
Proceeding
Outcome
Lagos, Kano
Time (in
years)
Cost (% of
estate)
Lagos, Kano
Lagos, Kano
2.0
22.0
116
Nigeria
RESOLVING INSOLVENCY
Strength of resolving insolvency index
The strength of insolvency framework index is the
sum of the scores on the commencement of
proceedings index, management of debtors assets
index, reorganization proceedings index and creditor
participation index. The index ranges from 0 to 16,
Figure 11.3 Strength of insolvency framework index (0-16) in Nigeria and comparator economies
117
Nigeria
Table 11.3 Summary of data for the strength of insolvency framework index Nigeria
Answer
(Lagos)
Score (Lagos)
Answer
(Kano)
Score
(Kano)
5.00
5.00
2.00
2.00
(b) Debtor
may file for
liquidation
only
(a) Debtor is
generally
unable to pay
its debts as
they mature
0.5
(b) Debtor
may file for
liquidation
only
0.5
0.5
0.5
1.0
(a) Debtor
is generally
unable to
pay its
debts as
they
mature
1.0
2.00
2.00
No
0.0
No
0.0
Yes
1.0
Yes
1.0
Yes
1.0
Yes
1.0
No
0.0
No
0.0
No
0.0
No
0.0
0.0
(c) No
priority is
assigned to
postcommence
ment
0.0
(c) No priority
is assigned to
Does the insolvency framework assign priority to postpostcommencement credit?
commencem
ent creditors
118
Nigeria
Answer
(Lagos)
Score (Lagos)
Answer
(Kano)
Score
(Kano)
creditors
Reorganization proceedings index (0-3)
0.00
0.00
N/A
0.0
N/A
0.0
No
0.0
No
0.0
No
0.0
No
0.0
1.00
1.00
Yes
1.0
Yes
1.0
No
0.0
No
0.0
No
0.0
No
0.0
No
0.0
No
0.0
Nigeria
119
The worker:
Is a cashier in a supermarket or grocery store,
age 19, with one year of work experience.
Is a full-time employee.
Is not a member of the labor union, unless
membership is mandatory.
The business:
Is a limited liability company (or the equivalent
in the economy).
Operates a supermarket or grocery store in the
economys largest business city. For 11
economies the data are also collected for the
second largest business city.
Has 60 employees.
Is subject to collective bargaining agreements if
such agreements cover more than 50% of the
food retail sector and they apply even to firms
that are not party to them.
Abides by every law and regulation but does not
grant workers more benefits than those
mandated by law, regulation or (if applicable)
collective bargaining agreements.
120
Nigeria
Lagos
Kano
Data
Data
No
No
No limit
No limit
No limit
No limit
108.8
108.8
0.2
0.2
Yes
Yes
Hiring
Fixed-term contracts prohibited for permanent tasks?
121
Nigeria
Lagos
Kano
Data
Data
6.0
6.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Yes
Yes
0.0
0.0
No
No
Paid annual leave for a worker with 1 year of tenure (working days)
6.0
6.0
Paid annual leave for a worker with 5 years of tenure (working days)
6.0
6.0
Paid annual leave for a worker with 10 years of tenure (working days)
6.0
6.0
Paid annual leave (average for workers with 1, 5 and 10 years of tenure,
in working days)
6.0
6.0
Working Hours
122
Nigeria
Kano
Data
Data
3.0
3.0
Yes
Yes
No
No
No
No
Yes
Yes
No
No
No
No
Yes
Yes
No
No
123
Nigeria
Lagos
Kano
Data
Data
1.0
1.0
4.3
4.3
4.3
4.3
3.2
3.2
2.3
2.3
11.4
11.4
22.9
22.9
12.2
12.2
124
Nigeria
Lagos
Kano
Data
Data
No
No
No
No
Yes
Yes
84.0
84.0
No
No
Yes
Yes
On-the-job training?
No
No
No
No
n.a.
n.a.
Yes
Yes
Yes
Yes
Yes
Yes
Job Quality
Nigeria
125
Distance to Frontier
The distance to frontier score captures the gap between
an economys performance and a measure of best
practice across the entire sample of 36 indicators for 10
Doing Business topics (the labor market regulation
indicators are excluded). For starting a business, for
example, the former Yugoslav Republic of Macedonia
and New Zealand have the smallest number of
procedures required (1), and New Zealand the shortest
time to fulfill them (0.5 days). Slovenia has the lowest
cost (0.0), and Australia, Colombia and 103 other
economies have no paid-in minimum capital
requirement (table 14.1 in the Doing Business 2016
report).
Calculation of the distance to frontier score
Calculating the distance to frontier score for each
economy involves two main steps. In the first step
individual component indicators are normalized to a
common unit where each of the 36 component
indicators y (except for the total tax rate) is rescaled
using the linear transformation (worst y)/(worst
frontier). In this formulation the frontier represents the
best performance on the indicator across all economies
since 2005 or the third year in which data for the
indicator were collected. Both the best performance and
the worst performance are established every five years
based on the Doing Business data for the year in which
they are established, and remain at that level for the five
years regardless of any changes in data in interim years.
Thus an economy may set the frontier for an indicator
126
Nigeria
127
Nigeria
City
Dhaka
Chittagong
So Paulo
Rio de Janeiro
Shanghai
Beijing
Mumbai
Delhi
Jakarta
Surabaya
Tokyo
Osaka
Mexico City
Monterrey
Lagos
Kano
Karachi
Lahore
Moscow
St. Petersburg
New York
Los Angeles
Weight (%)
78
22
61
39
55
45
47
53
78
22
65
35
83
17
77
23
65
35
70
30
60
40
128
Nigeria
Law library
Online collection of business laws and regulations
relating to business
http://www.doingbusiness.org/law-library
Contributors
More than 11,400 specialists in 189 economies who
participate in Doing Business
http://www.doingbusiness.org/contributors/doingbusiness
Entrepreneurship data
Data on business density (number of newly
registered companies per 1,000 working-age
people) for 136 economies
http://www.doingbusiness.org/data/exploretopics/ent
repreneurship
Methodology
The methodologies and research papers underlying
Doing Business
http://www.doingbusiness.org/methodology
Distance to frontier
Data benchmarking 189 economies to the frontier
in regulatory practice and a distance to frontier
calculator
http://www.doingbusiness.org/data/distance-tofrontier
Research
Abstracts of papers on Doing Business topics and
related policy issues
http://www.doingbusiness.org/research
Nigeria
129